Moody's RMS Estimates Maui Wildfire Insured Loss at Up to $4 Billion
August 25, 2023
Catastrophe risk modeling firm Moody's RMS has estimated economic losses from the Lahaina and Kula wildfires in Hawaii at $4 billion to $6 billion.
Moody's RMS estimated that the burn footprints in Lahaina and Kula include insured property value ranging from $2.5 billion to $4 billion.
Moody's RMS said the loss estimate reflects property damage, contents, and business interruption, across residential, commercial, industrial, automobile, and infrastructure assets.
While the economic loss estimate reflects direct and indirect losses from damage to physical assets, it does not consider macroeconomic factors such as expected reduction in the island of Maui's gross domestic product, government payments, or additional social costs due to the wildfires, a Moody's RMS statement said.
The risk modeler noted that most of the wildfire losses are expected to be from the town of Lahaina, where a wildfire burned more than 2,100 acres and destroyed almost 2,200 acres.
Most of the economic damage is expected to be covered by insurance, in the range of approximately 75 percent or more, Moody's RMS said, because wildfire is a covered peril under typical insurance policies and the island has high insurance penetration rates.
Several extenuating factors could drive losses from the wildfires beyond the simple insured value estimates, the risk modeler said.
"Post-event loss amplification is expected to be high in this event due to the island effect on supply chains, high construction labor costs in general, inflationary impacts during the expected long recovery time, and potential ordinance and law requirements," Rajkiran Vojjala, vice president modeling at Moody's RMS, said in the statement.
August 25, 2023